Obie Fernandez

The Future of Consulting

I am doing an online (live) panel discussion with special guests a little less than an hour from now.

https://www.airpair.com/airconf2014/keynote/future-of-consulting

Here is a brief list of topics that we hope to cover:

- state of software consulting today. static? growing?

- what are the external forces shaping change in the industry?

- opportunities of ongoing engagement outside traditional project-based models

- should firms be looking to unbundle services?

- or additional bundling and/or co-promotion of educational and othe rservices (ala Thoughtbot)

- what is the proper balance of generalists vs. specialists on staff? what are hiring challenges?

- how does a firm stay “top of mind” at clients between projects?

- deployment of proprietary tools make sense? shared IP?

- pricing: time vs. value based?

- new competitors and business models? real threat?

 

Feel free to add questions for the panelists on the talk page's chat section here. To access the chat, you must be registered for AirConf and RSVP for the panel. If you're a little late to the show (starts 3pm ET) don't worry, you can just hit play on the Youtube player and watch it from the beginning. We'll try to address any questions/comments posted before the scheduled end time around 4pm ET.

Robert Williams, man to watch in 2014

I recently interviewed Robert Williams, founder of Workshop. Over the course of the last year Robert went from full-time employment, to successful freelancing, to launching a successful online business helping other freelancers to succeed using his methods.

What is your background?

My background is in design. I went to an expensive art school - which I now regret, because 90% of the education I use on a daily basis is stuff I learned online (mostly for free).

I worked at a few design agencies after college, then in the marketing department for a large nursery - but those jobs left me unfulfilled and wanting to start my own business. I got that opportunity after I got fired from my job only a few months after receiving a raise, to boot.

I decided that instead of going to interviews I’d look for freelance work full-time. This was an epiphany for me, because I truly became grateful for having been let go from my 9-5 job. I spent my first week literally laying out on the beach everyday - and the freedom was awesome. That was the point where I knew I probably wouldn’t ever hold a 9-5 job again.

How did you manage your freelance work?

Starting my own freelance design shop has been one of the most educational experiences in my life. I realized I had to stand out from the average designer online. This simply wasn’t happening on sites like dribbble, twitter, and behance. On those sites you’re competing with thousands of the world’s best designers and you don’t get to highlight your specific skill.

I decided to delete my portfolio website, and focus on contacting leads 1-on-1 in order to a)  track the amount of people who were replying to me and asking to see my portfolio and b) have more control over how I was presenting myself and my services.

This had pretty great results, I was able to make $30k in my first six months freelancing (without a portfolio website). This fascinated me and I began to study and collect evergreen principles to freelancing. The fact was that most places online tell you to post on twitter and dribbble and ‘get your name out there,’ but for someone just starting out this isn’t the right move.

Okay, so what is the right move for a new freelancer?

I created an optimized system for finding the best leads online quickly, and made templates for stuff like emailing prospects, onboarding new clients, getting world-class feedback and more. Optimizing my freelance business has been one of my biggest passions in the past year.

Recently, I started a new project focused on helping other freelancers do the same; Workshop. I send the web’s best leads to a private list of freelancers every day. I also send all of my secrets and techniques to building my freelance business to members, which has been an awesome experience.

How did you decide to get into this particular business?

I got the idea from desperately wanting this service for my own business. As freelancers, we charge anywhere from $50-$1k per hour, and if you factor in the time is takes to look for work - you’re spending a fortune on finding work. I wanted a service that automated this process for me, but that was high quality. A few other people were doing like a auto-generated lists of leads, but the quality was really low, and not worth the money. It was something that I needed to do for my business anyway so I really liked the idea of charging for this service.

Then, about 5 weeks ago, I was listening to a podcast interview with Ruben Gamez from bidsketch. He said one thing in particular that really resonated with, ‘a lot of people are listening to podcasts nowadays but not many are actually doing something actionable as a result.’

I decided then and there to pursue this idea - and try to grind it out. I put together a quick landing page, using techniques from online courses I’ve taken in the past year including, earn1k, recurring revenue for consultants, 30x500, email marketing for startups, and a few others.

I was also a member of JFDI, a private community of bootstrappers, who really helped me talk through my landing page and iterate quickly by providing me an extra set of eyes (or ten). This community support was integral in keeping my confidence up when people started to question my authority and service. I literally had one person sign up on the first day. I spent like 5 hours finding the 5 most awesome leads I could, and sent them over to him. Luckily over the next few days I got some traction and things began to take off.

What differentiates you from potential competitors?

What I’m doing differently, is 100% hand-curating every single lead I send. I aggregate thousands of job leads everyday and painstakingly comb through them by hand. I have strict, and vigorous criteria for finding the best leads.

The projects are all stuff I would apply to. Nothing that would have a budget of less than $1000 and I make sure every lead is remote, and open to freelancers everywhere. Also, I try to make sure and do a little extra legwork to include things like the company website and contact email if possible.

The result is a list of 5-10 leads that have all the relevant info for a busy freelancer, and none of the fluff. 90% of the work is done for you. All you have to do is reply to these 5-10 leads and you will have a constant stream of people entering your prospect cycle. 

Members no longer have to worry about job boards which were really designed for full-time work anyway, and instead reply to everything from their inbox. I also offer to monitor any job boards members want me to, so you can literally use me as a virtual assistant.

The difference between me and a virtual assistant you would find on places like odesk, is I’m an experienced freelancer myself. No one is going to be able to decipher the great leads from the riff-raff as good as you do, unless they’re a high-paid consultant themselves, which I am. 

What have been your biggest mental obstacles?

Subconsciously it was wanting to see success immediately. I heard people like 37signals and Amy Hoy talk about growing slowly, and totally agreed, but it wasn’t until I actually started this project that I realized I’ve been way too impatient in the past. 

90% of growing a great business is just grinding it out. Sure, you need luck, timing, and help from others, but if you’re not there everyday it doesn’t matter. You can look at this as a negative or a positive. It’s up to you. You can be impatient and give up on all of your ideas… or you can decide to do something regardless of how long it takes. But make sure you charge from the beginning, otherwise you won’t know how you’re doing.

To me, it’s one of the greatest strengths, because I don’t have control over whether someone with a million followers tweets out a link to my website, but I do have control over whether I put in effort each and every day. I’m okay with growing slowly because I’m building, learning, and I want to be in it for the long-term. I also want to create the absolute best service for freelancers and help them build an awesome business for themselves.

Thanks Robert!

Are you a freelancer? Check out Workshop for yourself.

How to staff innovation teams in your company

Throughout the time I was running Hashrocket, we constantly entertained innovative ideas that might allow us to evolve into a product shop, ala 37signals. Actually, we didn't just entertain those ideas, I also tried to set them in motion by tasking people in my organization to execute them. In doing so, I learned first-hand about the motivations that drive normal employees and how they differ (dramatically) from entrepreneurs.

Risk is everything.

It doesn't make sense to throw people who aren't entrepreneurially minded into innovation efforts and expect them to come up with new products. Innovation teams should be made up of employees who have agreed to take on personal financial risk in the interest of reaping financial rewards. The most independent and creatively driven employees will gravitate there naturally. Would-be startup founders who are considering leaving to launch their own business will have an attractive alternative — and the company not only avoids losing capable, ambitious employees but increases the profit in retaining them.

It takes only one person to leave and found a successful startup for your company to lose out on a huge growth opportunity. If they leave anyway, you should consider investing in their startup. But this all assumes that you employ entrepreneurial people in the first place!

Once a company leaves high growth behind and matures, the way that we did at Hashrocket, it forms an implicit social contract with its employees, a promise to provide them with stability over the long term. At that point, much to my frustration, the risk-takers are long gone. They've either gotten out of the building, permanently, or they have evolved along with the company by putting down stable roots of their own. At Hashrocket, I witnessed singles couple up and get married, and childless couples begin having one, two or more babies. We began hiring more and more people with families. Not that there's anything wrong with that, but their priorities are completely different. Those people might entertain entrepreneurial fantasies, but their chances of following through on them are very slim.

Therefore, I had a really hard time finding anyone willing to take on personal financial risk in new innovative ventures. It just wasn't feasible for them, and at some point, you need to bring in other entrepreneurs to lead those efforts. The CEO can't be responsible for all innovation.

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Like this topic? I’m writing a book with my co-author, Trevor Owens, on corporate entrepreneurship called The Lean Enterprise. 

New Template: Lead Referrals Agreement

My little legal documents template side business continues to chug along. It's not bringing in quite as much as it was six months ago, but I think a summer lull might be to blame. Nonetheless, I have news: A new product!

This tried and true template is based on an agreement that I have been using successfully for the past couple of years. You'll want to put it in place with companies that you refer business to on a regular basis.

The great thing about it is that both sides benefit from the arrangement, and done properly you can keep a steady stream of passive income.

Check out the Lead Referrals Agreement. Only $29 for a limited time.

Rave Reviews for Consulting Masterclass

My next consulting masterclass with Brennan Dunn will happen the weekend March 16-17th. Over the course of two 5 hour sessions, we cover the nitty gritty of turning your freelancing or small contracting operation into a world-class operation. The core topics are sales and marketing, money, staff and client management, culture and products. Plus as an alumni you get exclusive access to a growing mailing list of fellow consultant entrepreneurs that act as a roundtable and support group.

Here's what some of our students are saying about their experience:

First of all, thank you for being so available and attentive. Both you and Obie have been absolutely wonderful in this process and I sincerely appreciate the time both of your have put into this. I'm excited to see where I can go now that I know what works.

Before I get into the feedback, I want to provide some feedback on what I keep coming back to as the most important part of the class:

If I forget about access to the community this class has introduced me to, which in itself is worth the price of admission many times over, the biggest benefit I've received from taking the masterclass is an absolute certainty that the knowledge I've gained can be used to grow my business. The masterclass has, in a big way, provided me with the ability to stop worrying about what the path between where I'm at and where I want to take the business looks like. Growth for my consultancy is now a known item and I understand the work I need to do to make it happen. If I had any doubts about the value of this course before enrolling, you two have solidly eliminated them through your full unrestricted access. THANK YOU!

Nicholas Hance of Reenhanced

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I'm having a rough time just selecting just one thing to rave about. The biggest lesson I learned was how to productize my offerings to be able move away from hourly billing. Also, the section about utilization/hiring taught me exactly when I need to grow my team.

The time I spent in the workshop was exhilarating. During the 10 hours, I filled up an entire notebook of notes. Having you two share your experiences and being completely transparent was amazing.

I can honestly say that this workshop really helped me lay the foundation for me to grow my consultancy. I always thought that I wanted to have a complete virtual company. However after Brennan's story about his company transition to brick & mortar and the importance of culture expressed by Obie, I have made it a goal in the next 2 years to open up a physical office for my team.

Kevin Faustino of Remarkable Labs

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First off, thanks so much for hosting this masterclass and for sharing all of your stories and tips. After first reading Brennan's "Double Your Freelancing Rate" and now taking the masterclass, my company has been undergoing a whirlwind of changes-- all for the better!

I had a lot of "aha!" moments during the masterclass. One that I felt like we needed to do immediately was joining the Chamber of Commerce. We had already identified small businesses as our desired type of client, but we weren't sure how to go about finding these types of clients (going to tech meetups, responding to online ads, etc. just kept putting us into contact with more of the same "dreamer"-type startups that we were used to and wanted to get away from).

I wouldn't cut anything-- every single topic was relevant to my relatively young business, whether it be in the immediate-term or in the short-term future. For example, despite not having any employees at the moment, being able to know what the pitfalls are and what issues to try and avoid is invaluable as we grow.

Obie is someone who we looked up to a lot when we were getting our business off the ground and Brennan is someone who we recently became familiar with but who has helped us so much as we've tried to really upgrade our consultancy. Being able to hang out and actually talk with our "consultancy heroes" was really, really cool.

I think that being able to just talk with other people about their consultancies is something that we didn't think was possible, but we sorely wanted. In my experience, there was a whole lot of secrecy surrounding consulting as a whole, especially regarding rates and such. I think creating a forum to talk about this kind of stuff is wildly beneficial and has really helped us feel like we can take our own consultancy to the next level.

Carlos Ramirez III of Cetrasoft

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I'm going to embarrass myself, but the whole concept of a sales pipeline, while it should have been obvious, was like a glass of cold water in the face. To this point, my thinking has always just been, "I've got to get as much work going NOW as I can," not," I need to line up high-quality work at a high rate that I can focus on and schedule it out to ensure continued income."

Name witheld

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Learn more and register at doubleyourfreelancingrate.com/build-a-consultancy

Top 10 Mistakes Companies Make During Acquisitions (notes)

Here are my notes from Don Keller's (@dkellerjr) talk Top 10 Mistakes Companies Make During Acquisitions, presented today at RocketSpace in San Francisco.

1. Founder Equity

Have your founders issued stock from day one so that all the appreciation towards an acquisition is counted as capital gains instead of regular income (which would happen if the founders had options instead.)

RSUs (promises to issue stock in the future) you have to make sure there is a liquid market when they are issued because their issuance will result in a taxable event. This mainly worked for Facebook.

Founders shares can be subject to a vesting schedule in a similar way to options. The company retains the right to repurchase the shares that are unvested if you part ways with the company. (Repurchase happens at the original price that was paid to purchase them.)

If you are joining a company and have the funds available to actually purchase stock, it's preferable to taking options. Some companies will allow that, others won't.

If the company is trying to "hook up" a key hire with shares for free on hire, it can bonus them or even loan them the amount that they will need to pay in taxes. Just make the person aware that the loan might be due if the company is not doing too well.

2. Make sure that IP ownership is well documented

If you're creating a business that is similar to your current employer, they might well own it unless you have explicit written agreements that say otherwise. This issue might not come up until after a startup is founded, funded, etc… then you go to sell it and the buyer digs up the issue as part of their due dilligence.

Every new employee should sign an invention assignment agreement, to bring assurances that the company owns any IP brought over.

If you hire a consultant and they develop something for you, they own it (unless you have agreements that say otherwise.)

The level of scrutiny that your company is going to be subjected to on acquisition is much, much higher than at any other time, even when investments happen.

3. Keep your options open

To maximize price, Company should leave itself with alternatives to the buyer they are targeting.

Alternatives could be another buyer, another investor, that the company could continue with its current situation, that IPO is an option. Focusing on one buyer is important, but not to the exclusion of others. "Companies get bought, they don't get sold."

Going around and establishing partnerships with potential acquirers is very necessary. Pace those relationships, so that they mature at roughly the same time. Once an acquirer is interested, they're not going to wait they'll want to take advantage of you on price and sign a LOI right away at a good price, but then put a 60 day exclusive window in place for due dilligence, during which you can't go out and talk to others, but then they'll come back during that window and say "gee, we can't do 20 million, but we'll do 12 million instead." You want to have something to support resistance in that case.

Even when you get an unsolicited offer, you might want to not seem too excited in order to maximize their interest. If the buyer realizes that you don't have alternatives, the price will inevitably come down later.

4. Avoid selling the Company for private company shares in a transaction that is taxable.

In most cases, when a private company wants to buy you for equity, you don't know what the true value of that equity and what sort of liquidation preferences are ahead of you by holders of preferred shares.

Also, avoid selling assets for a price above your net operating losses. Particularly early stage companies should beware of double-taxation problems. Simplest way to avoid this problem is to do a merger instead, so that only the stock that is sold is taxed. Buyers in small transactions (<5 million) are usually paranoid about possible liabilities outweighing the benefits.

It's tricky, but generally speaking if the value of the deal comes in at least 50% stock, then the transaction is tax-exempt (until the shares received are sold.)

5. Make sure to understand the deductions from the negotiated purchase price.

There are many adjustments to the initial offering price that affect how much money you end up with:

• escrows (money that is set aside to pay for unforseen liabilities, usually 10-20%, for 2-5 years)
• legal fees (50k - 200k, depending on the purchase price)
• balance sheet adjustments (liabilities push down the price)
• special indemnities (like 409a concerns)

There's a real difference in east coast vs. west coast buyers and the terms that they demand. Be careful with how much the buyers demand as subject to clawback. Generally you want the rights to as much of the proceeds as possible.

Figure out and negotiate as much of these things asap before the 60-90 day "no shop" period. Push the buyer to get as much due dilligence and possibly even board approval before you agree to a lockup, so that the lockup is only the period needed to execute the deal.

Often buyers will put "residuals clause" in the NDAs, which dilute the value of the NDA in protecting the seller's secret sauce. Push off giving the seller access to important IP until very late in the process.

Back up the price that's put on the table with as much preparation as possible, especially if you're able to present real data.

6. Make sure you understand the open source code used in your product and that you own it in a way that is possible to sell.

Open source issues rarely are showstoppers, but often there are hangups related to the "black duck" analysis.

7. Mind 409 issues - company minutes, stock options.

Make sure your books are in order. Don't leave housekeeping until the last moment. Not doing so can really mess up a deal or push up the escrow requirements.

8. Don't wait until the last minute to think about and negotiate employment agreements and non-competes.

Generally, if there are considerable proceeds then non-competes of 3-5 years are very enforceable. Use your own counsel because the counsel for the company is representing the board and the company shareholders and that doesn't necessarily mean they are concerned about your views, since there is potential for conflicts of interest.

9. Be weary of earn-outs arrangements.

"We're offering 20 million, but only 1 million up front and then the rest if you meet certain expectations related to our business goals and projections." 50% of earnout arrangements end up in litigation down the road because expectations are not met in a way that is unfair to the seller.

10. Pay attention to sentiment of your board members and investors.

Look out for board member bias for or against a sale and be aware of a strategic investor reactions to the sale. For institutional investors, a lot will depend on where they are with regards to their own fund, are they near the beginning or are they in a hurry to close out so they can raise another fund.

Bonus Topic: Acqui-hire issues.

As a founder negotiating the deal, be careful with the buyer wanting to screw the existing investors. The biggest tension is the split between the proceeds going to the investors vs. employees over the next 4 years.

Bonus Topic: Bankers on the seller side?

In deals of $50-100 million, probably makes sense to hire a banker to represent seller's interest and maximize the deal terms. However, sometimes the buyer will balk if you try to get them to talk to your banker instead of you. The board might also balk at paying 1-2% in fees to the banker, but it should be worth it because of the resulting increase in the sell price.

RSA (Retained Services Agreement)

Over the years I've blogged extensively about Master Service Agreements (known as MSA documents) and I even sell them via this blog. MSAs are a useful tool for consultants wanting to contract individual chunks of work as separate statements of work (via SOW addendums to the MSA). Those SOWs can specify either hourly or deliverable-based pricing.

MSAs are by no means the end-all, be-all of consulting contracts. In fact, if you have the reputation and marketing saavy to get away with using it, I think you should consider instead relying on a Retained Services Agreement or RSA.

The RSA is different from its cousin the MSA in several ways:

• You only need to execute it once, there are no SOW addendums.
• It specifies a monthly retainer that is paid upfront, every month
• It can easily specify an irrevocable minimum contract length
• It can easily mandate a minimum written notice of termination

Since you're always paid up-front with an RSA, it's significantly easier to pause work on late payment, which is one of the best, if not the absolute most effective way of making sure that you always get paid for your hard work.

Charging an upfront monthly retainer is an interesting adventure if you're accustomed to billing on an hourly basis. It's also a potential sticking point in client negotiations. In essence, an RSA establishes a minimum spend per month, which is always billed no matter how much work is performed. You can optionally establish that the monthly fee is calculated as a block of hours at an hourly rate, which would allow you to bill for overtime, but many people only specify a monthly rate that is not subject to pro-rating. That takes serious courage.

Use of an RSA is not for the faint of heart. You must be confident that you will be able to deliver results that the client wants on a consistent basis. You must be very communicative about the work that you're doing. Most importantly, you must know that you will be able to allot the minimum number of hours committed to that client to them on a monthly basis without stretching yourself too thin. Otherwise, you may be faced with a client that is demanding to see time logs and explanations of where their money went.

Personally, I use an RSA for my consulting contracts nowadays instead of a MSA. As an entrepreneur and independent consultant that's really short on time, I can't afford to constantly renegotiate terms or be chasing after late payments.

Have you signed an RSA before? As a service provider or a client? What is your opinion of RSAs versus MSAs, engagement letters or one-off contracts? Please let me know in the comments.

Buy my proven RSA template bundle here for only $99

Hiring Me As a Consultant / Part-time CTO

(Updated July 27, 2012)

My primary offering is honest and experienced advice. If you've followed me for awhile, then you know what my areas of expertise are:

• Growing a consulting operation from scratch
• Leadership of web development teams
• Adoption of Agile and Lean Startup techniques
• Ruby on Rails-related technology (I can pair-program with you or your team)

Hiring me as a consultant is really easy. You may purchase my time at a reasonable hourly rate, which fluctuates based on my workload and is negotiable based on the length of the commitment. A couple of hours will have a premium rate, but if you need more than that then I'm willing to be very reasonable and charge around what you would expect to pay a shop like Hashrocket for a developer.

You should also know that I will not try to sell you anything or anyone else if you hire me. I have no plans of building another Hashrocket. If you're interested in booking my time over the course of several months we can work out a retainer agreement similar to how you would retain a lawyer or accountant.

To book my time, we just need to have a preliminary conversation about what you want to achieve by hiring me. I don't have problems with signing an NDA, if you require it. Once we officially book our billable time together and execute a simple consulting agreement, I’ll get whatever I need from you to prepare and get started.

My email is [email protected] I can help you win.

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Hat tip to one of my heroes, Mr. Tincup, for inspring me to describe this offer in this way. You should hire him for marketing advice.

Hey Web Startups, Hire Consulting Firms On The Cheap!

So you're an entrepreneur and you're doing a lean web startup using Ruby on Rails. You're teaching yourself Rails and proud of yourself for going at it alone and not spending a bundle of cash. You know that you can't afford to hire a world-class shop like Hashrocket, Thoughtbot or Pivotal Labs to work on your project, because the minimum project budgets they are interested in are in the six figures.

Incidentally, this post is strictly my personal opinion is in no way endorsed by or representative of anyone at Hashrocket, ThoughtBot or Pivotal.

Well, allow me to let you in on a little secret. You can absolutely work with those firms and maximize the benefit provided to you for as low as a couple thousand dollars. Just not in the way that you might think. And it won't be the way that they would prefer to work with you, but they'll still do it.

See the jars above? Consider the container to be the size of the available billable hours in a month. The large rocks and pebbles are current projects. It is impossible to fully utilize the space available unless you start adding smaller rocks and pebbles and eventually, grains of sand. Even the busiest consulting shops always have small amounts of utilization available. It's the slack in the system, time for people to relax, the empty volume of the jars. Despite the importance of slack, the profits of a consultancy live and die by utilization. When I was in charge of Hashrocket, which was generally busy, do you think I stressed about utilization? Yes I did. Every fucking week of the year. It's one of the reasons I got out of the consulting business. Will most consultancies take advantage of opportunities to bump up their utilization with profitable small work? Yes! The trick is how to make them do it, even if they resist at first.

Before I describe that trick, let me explain the backstory that provoked this post: Last night I got to know a couple of young entrepreneurs from NYC, Chris and Philip. They are working on an interesting little web startup named Meeteor. It's technology driven. During a conversation about testing, Philip told me that he spends a couple hours manually testing the app everytime they're ready to do a deploy. They don't do any automated testing, because they don't have the time to figure out how to do it well. My ex-ThoughtWorks friend Kurt Schrader was present and we did the requisite head shaking and tsk-tsk-ing about their failure to test their code. But the truth is, if I were in these guy's shoes I would probably do the same thing. It takes years to get really good at TDD and integration testing to the point where it doesn't slow down your progress tremendously. Sure, without tests you'll build up technical debt to the ceiling and the whole project may eventually collapse under its craptastic weight, but in the meantime the perceived slowness of figuring out how to test your stuff will demoralize and destroy your productivity. It's a no-win situation for newbies.

My advice to the Meeteor guys (and to all of you in similar situations) is the secret alluded to above: Hire help from Hashrocket (or any other competent firm) but only for a day or two at most. And I'm going to tell you exactly how to do that:

1. Call the shop up and get a decision maker on the phone. Convey that you know exactly why you're calling them and what you need.
2. Request their top Rails (and/or testing) expert for 1 day. State right off the bat that you're willing to pay their full hourly rate for those 8 hours. If you can travel to where that person is then state that you're willing to do so. Otherwise offer to pay for reasonable travel expenses to get the expert on site with you for a day.*
3. Be insistent and don't lowball them on the price. Even if they want a substantial markup on their normal rates it will still be worth it. Be prepared to have to wait a few weeks for that person to be able to take a day off from their current project. Be prepared to wire half the money up front as a deposit or even pay in full upfront.
4. Make sure the contracting goes as smoothly as possible. Do not involve your lawyer in the paperwork or negotiate on price. Do not keep anyone on the phone for a long time answering questions. Anything that makes the sale time-consuming to close (read: expensive to handle) will make the whole gig unprofitable and they will rightly tell you to get lost.
5. Once you are working with your expert, sit as a pair at the computer with them but make them drive the entire 8 hours. Do not touch the keyboard at all. Your aim will be to get the expert to tackle as many sticky problems as possible in 8 hours. Dedicate the first hour to making them set your development environment up properly, because it the way you have it right now sucks. Don't let them try to teach you VIM if you use TextMate, like don't even spend 5 seconds on that, but let them use whatever they normally use. Do not do any storycarding or get any consulting about your consulting process whatsoever. Remember that you're not there to learn directly from your expert. What you are there for is to direct the work, answer questions about the domain and keep your expert focused and productive for the duration of the 8 hours. That includes getting coffee, snacks, cigarettes, whatever. You are there to get them to do as much work on your app as possible and you will learn later on from analyzing their work.

* Right now (Mar '11) a total budget of $3k is probably very reasonable for what I'm describing.

In the case of my friends at Meeteor, they'd want their expert to implement some cross-browser selenium integration test cases. All they need is one of their most difficult ones, because once they have the scheme setup and one or two examples to draw from, they're smart enough to figure out the rest themselves.

Remember that the point of this technique is to buy as much great coding as possible in a day or two. Then you can use the results for inspiration for your own hacking. This technique works with any superstar programmer whether they are coming from a shop like Hashrocket or not. Shop refuses to work with you? Hire one of their guys for a single-day side gig! In Europe and using Mongo? Throw a couple thousand at my friend Durran to pair with you for a day. You get the idea. Just make sure that the person you hire works full-time as a programmer every day. This scheme wouldn't work with someone like me; I have plenty of depth, but slow velocity since it's not what I'm doing everyday.

The productivity boost you can get as a newbie developer from working a true expert for just a day (or two) is exponentially more valuable than what it will cost you in cash.

Since I finally got my LaunchRock Invite...

I’m happy to be officially disclosing a poorly-kept secret today. NO, I’m not gay. I’m not quitting Ruby or Rails. I don’t have brain cancer. I’m not a vegan. (Oh wait, yes I am.) Seriously though...

As of January, I have transitioned away from my leadership role at Hashrocket in order to focus on a new startup venture named RightBonus. My partner and co-founder is Nashville’s own Eliza Brock, one of the most badass and entrepreneurial programmers that I know. We are working on a platform to revolutionize the way that progressive companies do incentive bonus pay programs.

I first met Eliza at Hashrocket in the Spring of 2010, when she worked on-site in Jacksonville as a client developer. We hit it off and during off-hours she was able to help me make some serious progress on The Rails 3 Way using some killer XSLT. Her tenacity and hacker sensibility really impressed me and left me hoping to work with her on something even more significant someday. Fast forward to this week and we're in Nashville working full-time on RightBonus.

“Wait a gosh-darned minute Obie, did you just tell us that you’ve left Hashrocket? What are they going to do without you!”

Indeed, while I’m still a huge believer in the Hashrocket Way and continue to be affiliated with the company as an advisor, I’m no longer working there full-time. Perhaps like many of you, I’d been searching for the right idea to use as the foundation for a new startup venture. When the opportunity finally presented itself to exit gracefully from Hashrocket in order to chase the entrepreneurial dragon again, I just couldn’t resist. I moved out of my condo in Jacksonville Beach at the end of January and have been focusing on RightBonus ever since. (I'm officially homeless at the moment due to embracing minimalism and the exile lifestyle, but that’s a different blog post for a different day.)

I have no doubts that Hashrocket will continue to thrive. We operated successfully, doubling revenues year upon year for the past 3 years. Headcount is now 30 people and ready to grow further. My partner Marian Phelan  takes over as President with full control of the company. Marian founded Hashrocket with me and has been in operations and finance as our CFO from the outset. She’s an experienced businessperson that understands how to cultivate the discipline and stability that Hashrocket will need as it continues to mature.

So where am I at with RightBonus? That’s a good question. Seed funding is in place. Eliza and I are embracing Lean Startup principles and are currently in the early stages of Customer Discovery. Our initial version is in progress and we are working with a kickass design/front-end team to have a private alpha release ready for demoing to friends and interested parties at SXSW in early March. I also plan to start blogging about the problems with compensation status quo. The ideas I’ll be introducing are based on solutions to the pains that I personally felt as an executive at Hashrocket, so they’re grounded in reality and have roots in behavioral psychology. I strongly believe that entitlement pay is a big problem. With RightBonus we aim to introduce open-minded managers and executives to the possibilities of performance-oriented compensation programs.

I’m super excited to dive back into the world of product development from consulting. It’s a great time to be doing a startup venture, with plenty of capital available if you play your cards right. The tools and techniques available today are also so much better than the last time I made the switch, way back in 2000. Hopefully, you’re also excited for me to share the journey with you, so stay tuned here.

If RightBonus sounds like it might be interesting for your own business, go ahead and follow us on Twitter and sign up to get a beta invite as soon as we launch.